Did Brian Moynihan Deserve a Raise?

After two years of being one of the lowest paid CEOs on Wall Street, Brian Moynihan's patience finally appears to have paid off. According to regulatory filings yesterday, the CEO of Bank of America got a 73% raise last year compared to 2011. With the increase, Moynihan will take home a total of $12.1 million between his $950,000 salary and stock grants for 926,238 shares.

Since taking the helm at B of A in 2010, Moynihan has consistently made less than both his peers in the financial world and even many of his own subordinates. Last year, the top executives at the nation's three largest banks excluding B of A earned an average of $19 million, led by the CEO of JPMorgan Chase Jamie Dimon's $23 million. And within B of A itself, Moynihan made less than his chief financial officer and both co-chief operating officers.

While Moynihan has always had detractors, it's impossible to deny the success he's had over the last three years. When he took the reins at the beginning of 2010, B of A was in dire straits. It was forced to dilute existing shareholders by more than half the previous year because of mounting losses in its recently acquired Merrill Lynch subsidiary. And the near-crippling legal problems stemming from its Countrywide Financial acquisition were a barely distinguishable roar in the distance. Had it not been for $45 billion in assistance from the federal government, it's safe to say that B of A wouldn't be here.

In the meantime, Moynihan has adeptly guided the bank through a gauntlet of dangers. As I discussed in a recent series on the bank's legal problems, B of A has now settled multibillion-dollar lawsuits with Fannie Mae and Freddie Mac, the Justice Department and 49 state attorney generals, the Securities and Exchange Commission, banking regulators, and even its own shareholders. All told, it's spent more than $40 billion thus far to atone for the acquisitive ways of Moynihan's predecessor, Ken Lewis.

Moynihan has nevertheless transformed the bank into one of the best capitalized institutions on Wall Street. His two-part strategy from the start was to build a "bulwark of capital" and then deliver all earnings to shareholders. And as my colleague Amanda Alix noted three months ago, he has unquestionably succeeded at the first objective. At the end of 2012, B of A's Basel III Tier 1 Common Capital Ratio stood at 9.25%, beating out rivals JPMorgan, Wells Fargo , and Citigroup which recorded analogous figures of 8.7%, 8.2%, and 8.7%, respectively.

Despite continued challenges on the legal front, Moynihan has guided the bank into a position where it can finally focus again on growing earnings as opposed to mitigating losses. In the bank's third-quarter earnings release, B of A's CFO Bruce Thompson said the words that all investors had been waiting to hear: "[W]e have turned our attention to driving core earnings."

Moynihan has since ignited an aggressive drive to do just that. In the beginning of December, he announced that the bank is getting back into the mortgage game after surrendering territory to the likes of Wells Fargo. At the end of January, he sent a letter to B of A's 270,000 employees outlining the renewed focus on customer service. And at a company gathering shortly thereafter, B of A announced a new marketing campaign designed to bolster these moves.

The big question going forward is whether these moves will succeed and, more importantly, whether Moynihan can deliver on his promise to start returning capital to shareholders. On the latter score, he has been particularly reticent, refusing to admit if and how much capital the bank has asked regulators for permission to return following the ongoing stress tests. At least one analyst has predicted it could be as much as quadruple its dividend. Though, at this point, there's little use in speculating since we'll know the answer to this by the middle of March.

The Foolish bottom lineGiven what he's accomplished over the last few years, it's safe to say that there are few executives who deserve a raise as much as Brian Moynihan does. The big question now is whether shareholders will get a similar raise in their dividend payouts next month. If so, it will only further affirm the impressive job that Moynihan has done since taking over at B of A.